Learning Outcomes
After completing the course, delegates should be able to:

• Explain the purpose and scope of ISQM 1 and ISQM 2
• Distinguish firm-level quality management from engagement-level responsibilities
• Identify the eight components of a system of quality management
• Understand how quality objectives, quality risks and responses are connected
• Recognise the responsibilities of firm leadership, partners and employees
• Identify matters that employees must communicate or escalate
• Understand the firm’s monitoring and remediation process
• Explain when an engagement quality review is required
• Assess whether an individual is eligible to act as an engagement quality reviewer
• Understand how an engagement quality review is performed, completed and documented
• Recognise matters that must be resolved before an engagement report may be dated
• Apply the standards to practical quality-management scenarios
  
  

This course provides an integrated and practical examination of ISQM 1, Quality Management for Firms, and ISQM 2, Engagement Quality Reviews.

It explains how a firm designs, implements, operates and evaluates a risk-based system of quality management and how engagement quality reviews operate as a response to identified quality risks.

The course connects firm-level responsibilities with the work performed by partners, engagement teams, employees, quality-management personnel and engagement quality reviewers.

Delegates will consider how ethics, client acceptance, resources, engagement performance, information, monitoring and remediation influence engagement quality.

The ISQM 2 component examines when an engagement quality review is required, who may act as reviewer, the cooling-off and objectivity requirements, the procedures performed by the reviewer, the resolution of concerns and the documentation required before the engagement report may be dated.

Practical scenarios will demonstrate how quality risks arise, what employees must report, how partners should respond and how reviewers independently evaluate significant judgments without assuming the engagement team’s responsibilities

Key Topics
Quality-management framework

• Purpose and scope of ISQM 1 and ISQM 2
• Relationship with ISA 220 (Revised)
• Roles of the firm, partners, employees and reviewers

Risk-based quality management

• Quality objectives
• Identifying and assessing quality risks
• Designing appropriate responses
• Scalability for smaller firms
• Practical risk-assessment exercise

The eight ISQM 1 components

• Governance and leadership
• Relevant ethical requirements
• Acceptance and continuance
• Engagement performance
• Resources
• Information and communication
• Risk assessment
• Monitoring and remediation

Employee and partner responsibilities

• Ethics and independence
• Resource constraints
• Consultation and differences of opinion
• Documentation
• Matters requiring escalation
• Leadership accountability

Monitoring, remediation and annual evaluation

• Monitoring activities
• Completed-engagement inspections
• Findings and deficiencies
• Root-cause analysis
• Remedial actions and effectiveness testing
• The three possible annual evaluation conclusions
• Responding to potentially inappropriate reports

ISQM 2 engagement quality reviews

• Engagements requiring an EQR
• Appointment and eligibility
• Competence, capability, time and authority
• Objectivity and cooling-off periods
• Use of assistants
• Performance of the review
• Significant judgments and professional skepticism
• Unresolved concerns
• Completion and documentation

Integrated case study
A practical scenario combining:

• Client acceptance
• An independence threat
• Insufficient resources
• A difficult accounting or audit judgment
• Consultation
• An EQR disagreement
• A monitoring finding
• Root-cause analysis and remediation